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S. HRG. 108–67, PT. 2

INDIAN GAMING REGULATORY ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

ON

OVERSIGHT HEARING ON INDIAN GAMING REGULATORY ACT; ROLE

AND FUNDING OF THE NATIONAL INDIAN GAMING COMMISSION

JULY 9, 2003

WASHINGTON, DC

PART 2

(
COMMITTEE ON INDIAN AFFAIRS

BEN NIGHTHORSE CAMPBELL, Colorado, Chairman

DANIEL K. INOUYE, Hawaii, Vice Chairman

JOHN McCAIN, Arizona,

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

ORRIN G. HATCH, Utah

JAMES M. INHOFE, Oklahoma

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

KENT CONRAD, North Dakota

HARRY REID, Nevada

DANIEL K. AKAKA, Hawaii

BYRON L. DORGAN, North Dakota

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

PAUL MOOREHEAD, Majority Staff Director/Chief Counsel

PATRICIA M. ZELL, Minority Staff Director/Chief Counsel

(II)
(III)

C O N T E N T S

Page

Statements:

Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado, chairman,

Committee on Indian Affairs ....................................................................... 1

Chaves, Frank, chairman, New Mexico Indian Gaming Association ........... 25

Demolli, Frank, general counsel, Pueblo of Pojoaque .................................... 13

Dorgan, Hon. Byron L., U.S. Senator from North Dakota ............................ 15

Johnson, Pedro, executive director, Public Affairs, Mashantucket Pequot

Tribal Nation ................................................................................................. 14

Martin, Aurene, acting assistant secretary, Indian Affairs, Department

of the Interior, Washington, DC .................................................................. 2

Pahmahmie, Zachariah, chairman, Prairie Band of Potawatomi Nation .... 8

Rivera, George, Lieutenant Governor, Pueblo of Pojoaque ........................... 13

Skibine, George, director, Bureau of Indian Affair’s Office of Indian Gaming Management ........................................................................................... 2

Soulliere, Brenda, chairperson, California Nations Indian Gaming Association ............................................................................................................ 23

Viarrial, Jacob, Governor, Pueblo of Pojoaque ............................................... 13

William, Jr., Herman A., chairman, Tulalip Tribes of Washington ............. 11

APPENDIX

Prepared statements:

Chaves, Frank (with attachment) ................................................................... 29

Hunter, Priscilla, chairwoman, Coyote Valley Band of Pomo Indians ......... 36

Johnson, Pedro (with attachment) .................................................................. 49

Martin, Aurene (with attachment) .................................................................. 89

Pahmahmie, Zachariah .................................................................................... 155

Soulliere, Brenda (with attachment) ............................................................... 163

Viarrial, Jacob (with attachment) ................................................................... 176

Williams, Jr., Herman A. ................................................................................. 188

Additional material submitted for the record:

A History of Indian Gaming in New Mexico: 1985–2001, memoradum

to Governor Bruce Sanchez from Richard W. Hughes ............................... 196

(1)

INDIAN GAMING REGULATORY ACT

WEDNESDAY, JULY 9, 2003

U.S. SENATE, COMMITTEE ON INDIAN AFFAIRS, Washington, DC.

The committee met, pursuant to notice, at 10:05 a.m. in room

106, Senate Dirksen Building, Hon. Ben Nighthorse Campbell

(chairman of the committee) presiding.

Present: Senators Campbell, Thomas, and Dorgan.

STATEMENT OF HON. BEN NIGHTHORSE CAMPBELL, U.S. SENATOR FROM COLORADO, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. Good morning, and welcome to the committee’s

second oversight hearing in the 108th Congress on the Indian

Gaming Regulatory Act of 1988, known by its acronym of IGRA. By

the way, Senator Inouye will not be able to be with us this morning. He’s in a markup on appropriations and unfortunately will not

be here. But any statement he sends in we’ll include in the record.

Congress enacted the IGRA in 1988 after the U.S. Supreme

Court handed down the Cabazon case which confirmed that Indian

tribes have inherent authority to conduct Indian gaming on their

lands. I think it’s fair to say that 15 years ago, no one could have

seen that by 2002 Indian gaming revenues would grow to $14.5 billion, the most recent revenue data collected by the National Indian

Gaming Commission.

The growth of Indian casinos continues at a very fast pace and

has caused some concerns in some areas in dealing with zoning,

local land use planning, and things of that nature. But I’m still

convinced that many of those disagreements are often worked out

and can be worked out with a dialogue between people on both

sides of the issue if they have good intentions and good will.

What many didn’t foresee back then was that States would try

and exact their share of gaming revenues from the tribes. Anyone

who reads the papers today realizes that with many States struggling to balance their own budgets, almost every one of them having a deficit, that day has come. In some cases, those same States

that opposed IGRA in 1988 are now the most ardent supporters of

Indian gaming, as long as they get their share.

The IGRA does make it clear that Congress views gaming as an

economic activity that Indian tribes can develop and that they

should be the primary beneficiary of the efforts. The drive by

States to get shares of tribal gaming revenues has only increased
2

since the 1996 Seminole decision. Tribal leaders are informing this

committee that many States will not even begin to negotiate without first getting an agreement on revenue sharing. We have asked

the Department of the Interior to explain to the committee the authority and criteria it uses in approving compacts that contain revenue sharing components. We have also asked Indian tribes and

tribal associations that conduct gaming to provide their experiences

with the compacting process and demands for revenue sharing.

They will also share with us the many good things that they have

done with their gaming revenues.

And with that, Senator Thomas, did you have an opening statement?

Senator THOMAS. Thank you, Mr. Chairman. Not really. I just

am very interested in what’s happening here. It’s a big dollar issue.

It’s important to the tribes, of course. The role of the State is an

interesting issue. Wyoming is involved, as a matter of fact, right

now with the Secretary. Also the type of land on which gambling

is initiated is interesting. So I’m more here to listen than anything.

Thank you.

The CHAIRMAN. Thank you. Then we’ll start with Aurene Martin,

deputy assistant secretary of Indian Affairs. Welcome, Ms. Martin.

And by the way, thank you for attending the ceremony in Montana

last week on commemorating the memorial for the American Indians who died at the Battle of the Little Big Horn. It was very well

attended with, I understand, over 5,000 people. I had to leave

somewhat early, but I was delighted to see such great, overwhelming support for it. Thank you for being here. Go ahead.

STATEMENT OF AURENE M. MARTIN, ACTING ASSISTANT SECRETARY, INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR,

WASHINGTON, DC, ACCOMPANIED BY GEORGE SKIBINE, DIRECTOR, BUREAU OF INDIAN AFFAIR’S OFFICE OF INDIAN

GAMING MANAGEMENT

Ms. MARTIN. Thank you. I enjoyed the event as well. It was very

moving.

First of all, I’d like to thank you for the opportunity to appear

here today to testify on this issue. My name is Aurene Martin. I’m

the acting assistant secretary for Indian Affairs at the Department

of the Interior.

You’ve asked us to appear today to talk about the Department’s

role in reviewing revenue sharing provisions included in class III

tribal-State gaming compacts. I’m here today to talk about that,

and I’m accompanied by George Skibine, who is the director of our

Office of Indian Gaming.

As you’re aware, such compacts are submitted to the Department

for approval pursuant to the requirements of the Indian Gaming

Regulatory Act, otherwise known as IGRA. IGRA provides that

class III gaming activities are lawful on Indian lands only if they

are, among other things, conducted in conformance with tribalState compacts entered into by an Indian tribe in a State and approved by the Secretary.

In reviewing a compact, the Secretary must ensure that three requirements are met. She must ensure that the compact does not

violate any provision of IGRA. She must also ensure that the com-
3

pact does not violate any other provision of Federal law that is not

related to jurisdiction over gaming on Indian lands. Finally, she

must ensure that the compact does not violate the trust obligations

of the United States to Indian tribes.

The secretary must approve or disapprove a compact within 44

days of its submission or the compact is considered to have been

approved, but only to the extent the compact is consistent with the

provisions of IGRA. A compact takes effect when the secretary publishes notice of its approval in the Federal Register.

Since IGRA was passed in 1988, the Department of the Interior

has approved approximately 250 class III gaming compacts between States and Indian tribes which are located in 24 States

throughout the country. Of those compacts, the Department has

approved or deemed approved revenue sharing provisions between

Indian tribes and the following States: Connecticut, New Mexico,

Wisconsin, California, New York, and Arizona. In addition, several

Michigan tribes are making revenue sharing payments to the State

of Michigan under compacts that became effective by operation of

law, and other Michigan tribes have made revenue sharing payments to the State under court approved consent decrees.

Section 11(d)(4) of IGRA specifically provides that the compacting

provisions of IGRA shall not be interpreted as conferring upon a

State or any of its political subdivisions the authority to impose a

tax, fee, charge or other assessment upon an Indian tribe, and that

no State may refuse to enter into compact negotiations based upon

the lack of authority in such State. However, since the Supreme

Court’s 1996 decision in Seminole v. Florida, more States have

sought to include revenue sharing provisions in class III gaming

compacts, resulting in a discernible increase in such provisions over

the past 7 years.

In general, the Department has attempted to apply the law to

limit circumstances under which Indian tribes can make direct

payments to a State for purposes other than deferring costs of regulating class III gaming activities. To date, the Department has

only approved revenue sharing payments that call for tribal payments when the State has agreed to provide valuable economic

benefit of what the Department has termed substantial exclusivity

for Indian gaming in exchange for the payment. As a consequence,

if the Department affirmatively approves a proposed compact, it

has an obligation to ensure that the benefit received by the State

is equal or appropriate in light of the benefit conferred on the tribe.

Accordingly, if a payment exceeds the benefit received by the

tribe, it would violate IGRA because it would amount to an unlawful tax, fee, charge or other assessment. Though there has been

substantial disagreement over what constitutes a tax, fee, charge

or other assessment within this context, we believe that if the payments are made in exchange for the grant of a valuable economic

benefit that the Governor has the discretion to provide, these payments do not fall within the category of a prohibited tax, fee,

charge or assessment.

Revenue sharing has undoubtedly been approved by the Department. It has emerged as a result of the Department’s review of

each individual compact over the past several years, and it is contained in the letters that we have sent to both the States and
4

tribes with regard to the results of our reviews. I have brought a

copy of those letters and would like to submit them to the committee for inclusion in the record.

The CHAIRMAN. They will be in the record.

Ms. MARTIN. Thank you.

As I stated earlier, States and tribes have increasingly agreed to

revenue sharing provisions. As part of this overall trend, the Department has observed a number of other issues that have arisen

in the context of revenue sharing and which may have serious consequences for Indian gaming in the future. These issues include an

increase in the number of provisions authorizing off-reservation establishments for gaming, sometimes out of State. And these are

often accompanied by high percentage revenue sharing provisions.

There have also been some attempts by tribes to define zones of

tribal exclusivity, most often around off-reservation sites. And

again, these are often accompanied by high revenue sharing provisions as well.

Finally, there are increasing concessions by States on issues related to gaming, but upon which the State may not be obligated to

bargain. These are also accompanied by high revenue sharing provisions. An example of this is an expanded scope of gaming in a

State where there might be a limited class III authorization within

the State for gaming, but the tribe is bargaining for an expanded

scope of gaming.

IGRA doesn’t give guidance on the legality of these issues in all

cases, and the Department must determine how to address them

as they are presented, which is most often within the context of a

compact submitted by an individual tribe. Where these provisions

appear to us to violate the purposes of IGRA or appear for other

reasons contrary to basic issues of fairness, the Department feels

limited in its ability to disapprove such compacts, given the charge

of the Department to review compacts to determine only whether

they violate Federal law; that is, whether they violate IGRA, other

Federal law or they violate the trust obligation to Indian tribes.

This concludes my remarks. I’d be happy to answer any questions.

[Prepared statement of Ms. Martin appears in appendix.]

The CHAIRMAN. I’m interested in hearing your views on a couple

of things. I visit a lot of reservations and a lot of casinos in the

process. Some are very, very successful. And if they have reached

some kind of a revenue sharing agreement with States, and it was

done without duress, done of their own volition, that’s fine. But I’ve

also visited some that are just barely making it. And there are

some casinos that are a way, a long way from any metropolitan

area, and frankly, there’s nobody in them except a few of the Indian people that live on the reservation and maybe a few non-Indians who happen to work there. But there is clearly very, very little

money from those casinos.

Does the Department have a view on revenue sharing or the

State’s taking money from the casinos through revenue sharing

when they’re that desperate and destitute?

Ms. MARTIN. We do have such a concern. Whenever we receive

an individual compact, we look at the provisions of the compact

and if it has a revenue sharing provision, we review it to find out
5

if that particular tribe is able to make those payments. Oftentimes

what we’ll do is require or ask for financial statements from the

tribe to find out if their projections and their operations support a

revenue sharing payment and if in fact what they’re getting in exchange for that payment is of substantial economic benefit to them.

The CHAIRMAN. Have you found that, what would you term a

‘‘substantial economic benefit’’? I can’t imagine any for a couple of

casinos that I visited, what benefits they’re getting from the State.

I don’t see any at all, in fact.

Ms. MARTIN. Up to now, the Department has only accepted one

type of benefit as being sufficient to merit a revenue sharing payment, and that is substantial exclusivity. That is in a State where

Class III gaming may be authorized but is not authorized for non–

Indian persons to operate commercial enterprises, but the tribe is

authorized to operate those enterprises. Then we would look at

whether a revenue sharing payment is warranted and to what degree, given a particular tribe’s circumstances.

In many of the cases you’re talking about these facilities are employment vehicles but they don’t raise a lot of money for the tribe.

The CHAIRMAN. And you said you’ve approved 250 compacts, and

of that, 6 have been with revenue sharing compacts?

Ms. MARTIN. Within six States and all of the tribes located within those States.

The CHAIRMAN. What is the Department’s role, in California now

there’s sort of an explosion of casinos, as you know. Are you dealing

with them, tribe by tribe with the State? Because I know they’re

having some pretty fierce discussions with the State in California

now about revenue sharing.

Ms. MARTIN. California, and I guess you could say this about

every State, has its own unique circumstances. They have a constitutional amendment which deals with Indian gaming. They have

an existing compact that most of the tribes have with the State.

Unless and until we start to receive those compacts for review, we

don’t really have a role in their ongoing discussions.

The CHAIRMAN. How many compacts are being reviewed in California?

Ms. MARTIN. I’m not aware of a specific number. The information

we get is anecdotal, really.

The CHAIRMAN. We’ve had some discussion, as you probably

know, dealing with revenue sharing, that those tribes that are

making a lot of money with tribal casinos should share with those

tribes that are rather poor. In fact, in some cases they do this, they

do it of their own volition. Would the Department favor some kind

of tribal revenue sharing?

Ms. MARTIN. I think that we have supported that type of revenue

sharing in the case of California. We haven’t had a larger discussion of whether tribes who were not willing to participate in such

a revenue sharing program should be coerced into such a program.

Obviously, it could be of tremendous benefit to some of the poorer

tribes.

The CHAIRMAN. Have you found that tribes that would see a benefit, for instance, if it went to the local communities or costs of police or fire or improving the roads to the casinos or something of

that nature, have you found that there’s less opposition to that?
6

Ms. MARTIN. I’m sorry, I guess I didn’t understand the question.

The CHAIRMAN. I can see that if tribes were concerned about

some of the funds going to something that they wouldn’t see any

benefits from, they would object. I guess what I’m trying to get to

is if there was a way that if those funds were deposited in some

kind of a development fund for the tribes, if they would see less

opposition by the tribes.

Ms. MARTIN. I can’t speak for the tribes themselves, but I would

think that given a choice between participating in a fund or making payments to a State where they don’t see an actual benefit or

they can’t track the benefit to their own communities and contributing to a fund that would definitely benefit other Indian tribes

and Indian people, they would want to contribute to such a fund.

The CHAIRMAN. Your testimony said that the secretary may only

disapprove a compact if it violates the provisions of IGRA or Federal law or trust obligations. Has a compact ever been disapproved

for violating the trust obligations of the United States?

Ms. MARTIN. Not that I’m aware of, no.

The CHAIRMAN. Once dollars go into the State coffers, can they

be used by the State for anything the State wants to use it for, or

is there any provision in the agreements that you’ve seen that

would allow that money to circulate and come back to help the

communities around the casinos?

Ms. MARTIN. Well, it really depends on the particular tribe at

issue. I know that in some States, tribes have attempted to make

agreements with the State where they agree to use the funds that

are given to the State for specific purposes, such as education or

to be used in communities that the tribe is located. But in other

cases, there is no such tie or requirement for the moneys to be

spent that way.

The CHAIRMAN. I remember in the last oversight hearing, staff

can remind me, but we had one tribe that told us of the millions

of dollars they pay into the State, and then the State testified that

that money was used for other things that had nothing to do with

the area where the tribe was. Then there was some other testimony by local officials complaining of the need for road improvements and all the other stuff around the area where the tribe had

built a casino. It was Connecticut, with the Pequots, as I’m reminded.

And I remember telling them at the time what that local community needed really was a better lobbyist in their State capitol. They

didn’t need to go after the Indians any more. If that money was

being paid into the State coffers and they weren’t getting part of

it back to the local communities, that’s the responsibility of that

local community, it would seem to me, to go to the State and demand some of that money be circulated back to their local concerns.

The Department of the Interior policy on revenue sharing, concerning that, what basis is there in the law to approve compacts

that allow revenue sharing for amounts far and above the cost of

impacts on local infrastructure? Is there anything in the law now

that allows them to demand excess money?

Ms. MARTIN. Well, there’s no specific provision that authorizes

revenue sharing per se. It’s a policy that has developed over the
7

past several years in response to benefits that tribes have negotiated with States.

The CHAIRMAN. So there is no statutory basis for your revenue

sharing policy. And apparently no broad regulations that guide the

Department either. So what gives you the guidance to determine

your conclusions for it?

Ms. MARTIN. Well, as I stated, over time the Department has reviewed these agreements on a case by case basis. In instances

where a State has negotiated things that are within its discretion

to negotiate and the tribes have been willing to pay for that, they

come to us with an agreement that they’ve made through an arms

length negotiation and they’ve asked us to approve that. Since the

State is not obligated to negotiate those items and the tribe is not

obligated to agree to them, we have approved those agreements.

The CHAIRMAN. I see. Well, this hearing basically, it’s not about

off-reservation acquisitions, but as you probably know, almost, at

least every week and sometimes on succeeding days, tribes are

here. In fact, I talked to one this morning that wanted to expand

their holdings, wanted to take some land into trust and want, if

they’re not doing it to the satisfaction and through the Bureau,

they want us to run a bill or help with a bill to take off-reservation

lands into trust. It just seems to me that there is some disconnect

between how it’s being administered and what they want from us.

But as you said, it’s tribe by tribe. I know with the advent of the

casinos and the money that is flowing through the casinos now,

there are many tribes who just a few years ago wouldn’t have

thought of gaming who see it as really an opportunity for jobs and

to provide some benefits for their members. I generally am very

supportive of that.

Well, thank you very much for your appearance this morning,

Ms. Martin. And I appreciate your testimony.

Senator Thomas, did you have any questions for Ms. Martin?

Senator THOMAS. Just one, sort of a broad one.

You sort of described your role and what you do. What would you

say, or would you suggest any changes in the system? Do you have

any particular problems in the system?

Ms. MARTIN. Overall, the Indian Gaming Regulatory Act creates

a delicate balance between tribes, States, and the Federal Government for the way that tribal gaming is operated. I think that there

are some improvements we would make if we could, and we’d be

happy to talk to you about what those might be.

Senator THOMAS. You can’t share them with us now? We’d have

to shoot you? [Laughter.]

Ms. MARTIN. The first thing that comes to mind is that 44 days,

or 45 days, by 44 days we have to have a definitive answer on the

approval or disapproval of a compact. And we would like to extend

that amount of time.

Also, because of the Seminole v. Florida Supreme Court decision,

there is an unequal situation that’s developed with regard to the

ability of States and tribes to negotiate. I think that we would support trying to fix that situation in some way. Off the top of my

head, those are a few things.

Senator THOMAS. If that doesn’t work, it’s between the States

and the tribes then it moves on to the Secretary, is that right?
8

Ms. MARTIN. The Secretary has promulgated regulations to address that situation and under those regulations, a tribe could

come to the secretary and apply for procedures to operate class III

gaming. But that regulation has been challenged by the States of

Alabama and Florida. It’s currently in litigation.

Senator THOMAS. I see. Thank you.

The CHAIRMAN. Mr. Skibine, before I go on, did you have any

comments to add to Ms. Martin’s?

Mr. SKIBINE. I just wanted to make one clarification, perhaps.

With respect to the class III gaming procedures, we have those regulations in effect. But if a State does not raise an 11th Amendment

defense to a good faith lawsuit by a tribe, then the process by

which they develop procedures and those procedures end up with

the secretary, like the case in Wyoming, not through our regulation

but through the statutory process.

Our regulations were meant to address the case where a State

does raise an 11th Amendment defense to a good faith lawsuit so

that the tribe essentially is left without any recourse. We decided

that the secretary had the authority to promulgate regulations to

entertain applications from these tribes. We have a few pending

now before us. That’s it, thank you.

The CHAIRMAN. I thank you. Before you leave, I might tell you,

Ms. Martin, I don’t know how far away the Department is from

picking a new assistant secretary, but you taking the reins in a

rather sudden and unexpected turn when the last assistant secretary left, I just wanted to tell you, I think you’re doing a very,

very fine job in fulfilling a difficult job as acting assistant secretary. Thank you for being here.

Ms. MARTIN. Thank you very much.

The CHAIRMAN. We’ll now move to the second panel, which will

be Zach Pahmahmie, chairman of the Prairie Band of Potawatomis;

and Herman Williams, chairman of the Tulalip Tribes; Jacob

Viarrial, Governor of the Pueblo Pojoaque, Santa Fe, and they will

be accompanied by George Rivera, the Lieutenant Governor of the

Pueblo Pojoaque in Santa Fe, and Frank Demolli, the general counsel for the Pueblo. With that, your complete testimony will be included in the record. If you’d like to abbreviate, just speak your

conscience rather than a written statement, that will be fine.

We’ll start with Chairman Pahmahmie.

STATEMENT OF ZACHARIAH PAHMAHMIE, CHAIRMAN,

PRAIRIE BAND OF POTAWATOMI NATION

Mr. PAHMAHMIE. Good morning, Mr. Chairman and members of

the committee. Again, my name is Zachariah Pahmahmie. I have

the pleasure of serving as the chairman of the Prairie Band Potawatomi Nation.

I want to first begin and express a point that I’d like to make,

the ability of gaming to transform peoples’ lives and create opportunity. I think personally I can speak of the fact that gaming has

been a part of my presence before you here today. Gaming revenues have helped to finance our education department and helped

pay for the cost of education, of attending Stanford University and

in 2000 when I graduated from the University of Kansas School of

Law. And at 28, I was elected the youngest chairman in the entire
9

history of the Prairie Band Potawatomi, and I’m sure I’m one of the

youngest tribal chairmen in the entire Nation.

I want to thank you for the opportunity to testify today about the

use and sharing of gaming revenues. I will discuss how our Nation

has used gaming revenues to strengthen our well-being, and how

we have, in the absence of a formal revenue sharing agreement,

shared the benefits of our gaming operation with Kansas and surrounding communities. I have submitted written testimony, which

I request be included in the record. I also have a resource directory

that I would like to be included in the committee file on today’s

hearing.

The CHAIRMAN. It will be included in the record.

Mr. PAHMAHMIE. Briefly, our reservation is an approximately

76,000 acre reservation located 20 miles north of Topeka, KS, and

our membership is approximately 4,900 people. In January 1998,

in partnership with Harrah’s, we opened our current Harrah’s

Prairie Band Casino, which offers class III gaming with approximately 950 machines, a bingo operation, a hotel and soon we’ll be

adding a convention center.

We do not have a formal revenue sharing provision as part of our

compact. Revenue sharing, however, was not a make or break issue

for the simple reason Kansas recognized that it would enjoy significant benefits from the increased economic activity of our nation’s

gaming enterprise. The compact itself states, the economic benefits

from tribal gaming, including increased tourism and related economic development activities, would generally benefit all northeastern Kansas. And this prediction has proven to be true. Positive

impacts of the casino for our nation, the State of Kansas and for

local governments cannot be overstated.

Our gaming enterprise has made significant contributions to the

State and surrounding communities by creating hundreds of new

jobs, generating millions of dollars in tax revenue and creating and

unprecedented level of secondary economic activity. Our casino is

the largest employer in Jackson County, with 916 employees, 91

percent of whom are non-tribal members. The current hotel and

events expansion will be constructed by a Kansas owned and operated company, and will ultimately add roughly 150 new jobs.

Job creation has also occurred in the areas of our nation such as

in our roads and fire department and accounting and administrative offices that have positions held by non-members. Our progress

has also spurred job creation off-reservation in Jackson County as

well. In addition to the creation of jobs, from 1998 when we first

opened our casino through 2002, we have purchased approximately

$29 million worth of products from over 500 Kansas vendors and

suppliers, paid over $8.9 million to the State of Kansas in income

taxes withheld from payroll of casino employees, paid $600,000 to

the State of Kansas in unemployment taxes withheld from the payroll of casino employees, paid over $156,000 in State liquor taxes,

paid over $856,000 to the State gaming agency.

The casino has attracted more than 6 million visitors since its

opening and has been the number one tourist destination in Kansas for the last 4 years. Our visitors, many of whom come from out

of State, frequent local restaurants, shop at local businesses and

stay at local hotels. We have helped revitalize the towns along the
10

Route 75 corridor, which is the main north-south route running

from Kansas to Iowa. And this increased local activity has propelled Jackson County from the bottom half of Kansas’ 105 counties when measured for economic performance to one of its top 10.

At a time when States are experiencing budgetary crises, the

Prairie Band Potawatomi Nation continues to provide a strong economic stimulus. We generate and share millions of dollars in increased economic activity, and this is happening in the absence of

a formal revenue sharing agreement with the State. The benefits

to the State, surrounding communities and our nation have naturally evolved from the opening and operating of our facility.

I would next like to discuss what gaming has meant to the Prairie Band Potawatomi Nation itself. Our nation has used gaming

revenues to exercise our sovereign rights of self-determination and

strengthened three core ingredients of a strong economy: A sound

physical infrastructure, stable government institutions and a

healthy, educated work force. In terms of our physical infrastructure, and this has been one of our highest priorities, financed by

gaming revenues, we now own 60 percent of our reservation land.

Before, we only owned 18 percent. This expanded ownership has

translated into greater sovereign control over the development of

our resources and increased opportunities for economic development.

Until 1998, our nation lacked any paved roads. We now work

under a 5-year road improvement plan and have 23 miles of blacktop and more to come. We also have been able to build seven new

bridges to replace ones that were unsafe. Projects like these promote tourism, create jobs and enrich our business environment and

quality of life. In addition, affordable housing has also been a priority for developing our infrastructure. Our people have long endured

substandard housing conditions. Recently, by leveraging our gaming revenues, we have been able to provide new housing for our

members and special housing for our elders. Our members can now

move home to work and raise their families on the reservation.

In addition to a sound infrastructure, successful economic development depends on strong and stable government institutions. To

this end, we supplement our court budgets with gaming revenues

to ensure that they function at their most effective level. Soon, our

court system will conduct its first jury trial.

Gaming revenues also support the education and well-being of

our members. Thanks to gaming revenues, we expanded our early

childhood education center so we can now serve 102 children,

whereas before we could only serve 20.

In terms of education, we are now able to assist 140 of our students in pursuit of their college and graduate degrees. Previously,

we could only afford to assist 30 to 40 per year.

The impact of gaming on our nation extends far beyond the bottom line. These improvements have transformed the morale of our

members, both young and old, and have solidified our community.

Gaming revenues have provided us with a stable base upon which

to chart our own future. Our success has expanded our vision of

what is possible and given our citizens, especially our youth, the

confidence to turn these visions into reality.
11

In conclusion, even though no formal revenue sharing agreement

exists between our nation and the State, we both, along with the

surrounding communities, have benefitted from the substantial increase in jobs, business activity and tax revenues produced by our

gaming enterprise. We are proud of our progress and we believe we

are a good neighbor and a solid partner, and are confident that our

strong relationship with the State and surrounding city and county

governments will continue long into the future.

Thank you.

[Prepared statement of Mr. Pahmahmie appears in appendix.]

The CHAIRMAN. Thank you.

We will now go to Chairman Williams.

STATEMENT OF HERMAN A. WILLIAMS, JR., CHAIRMAN,

TULALIP TRIBES OF WASHINGTON

Mr. WILLIAMS. Thank you, Chairman Nighthorse Campbell and

other committee members, for being here today, and thank you for

inviting me to make my short little brief comments.

Washington State is one of the most robustly competitive gaming

markets in the United States. We have many tribal casinos and

what they call mini-casinos, horse racing, punch boards, pull tabs,

and a heavily promoted State lottery. Washington State does not

have a tribal-State casino revenue sharing, per se. Should the

tribes be giving the State a percentage off the top? The answer:

Tribes already support their local communities generously.

Revenue sharing only makes sense if the tribes have an exclusivity. But with the wide variety of choices already in the market and

constant pressure for more, it’s hard to imagine how the clock could

be turned back now, or at any point in the future. To be candid,

Mr. Chairman, as you well know, Indians have quite enough experience in giving up things of value only to get little or nothing in

return.

Gaming compacts already require that tribes share revenue with

our communities. Other non-tribal gaming operators in the State

have no such requirements. Horse racing is barely taxed by the

State, and the mini-casinos are not taxed at all. Tribes are allowed

not more than two locations, but the State lottery is in nearly every

grocery store and marketplace. There are no limits as to how many

mini-casinos one person can own.

But thanks to IGRA, tribes are now able to offer services to their

members which simply did not exist prior to IGRA. And I’d like to

thank everybody for the hard work that they did in getting IGRA

passed. Education, housing, health care, elder care, child care, drug

and alcohol treatment, as well as cultural restoration, law enforcement, fire suppression, emergency medical and many others are

now funded with our gaming revenues. Not only do we fund services for tribal members and other Native Americans, we have also

extended the benefit of our success to the surrounding communities

and to the State itself. Nearly 60 percent of all Tulalip tribal employees are non–Indian, non-tribal. Last year, we paid nearly $45

million in salaries. Our gaming facility alone paid over $100 million for goods and services to vendors, which 75 percent come from

the State of Washington.
12

Over the last few years, Tulalip has donated over $1 million for

charitable purposes. In 2003 alone, we will make another million

dollars in payments to local city and county governments for community impacts. We also operate one of the most successful boys

and girls clubs in the Nation and in our region. If you ever want

to see America’s melting pot in action, come to Tulalip and visit our

facility. Children of every race and color are playing together in the

gym, working together in the computer labs and eating together in

the cafeteria, all built with tribal revenue.

If you come to Tulalip, you will take an overpass from Interstate

5 which the tribe paid the majority of the cost to build—as we all

know, overpasses are not cheap—despite the fact that over 70 percent of the traffic goes not into Tulalip but into the surrounding,

into the neighboring community. Tulalip has also invested into

much-needed infrastructure for our reservation, bringing services

to our people and beginning to take steps necessary to establish a

true economy by attracting business investment. I believe this was

the true intent of IGRA.

We have used lands adjacent to Interstate 5 to develop a tribal

city, Quil Ceda Village. Quil Ceda contains many retailers, we have

Home Depot, Wal-Mart and we just constructed a new casino as

another anchor tenant for our Quil Ceda Village, as well as offices

of the regional chamber of commerce. In the future, the Village will

include a hotel, a convention center, more retail stores, office space,

tribal administration buildings, manufacturing and distribution

and hopefully, a university. We will need our gaming revenue dollars, because we’ve created a city but we have yet to gain any of

the taxes that we generate. All those taxes still go to the State.

We’ve been 5 years, we’ve been working down in the State legislature to get a tax bill passed. We haven’t been successful to this

date.

Isn’t the purpose of IGRA promoting economic opportunity or diversity for Indian tribes? After centuries of failed Federal policy toward Indian nations, gaming has finally provided a path to self-sufficiency. You gave us the opportunity and we, the Tulalip tribes,

have endeavored to make the most of it. A large part of making the

most of it has been to recognize that we must give back to the land

and all of its people. We are doing this by investing in resources,

creating good jobs and jobs that are environmentally friendly and

supporting our local community’s needs.

So I’ve come here today, Senators, to tell you that in Washington

State, Tulalip tribes and other tribes already share our revenue. In

doing so, our tribes have lived up to the spirit of IGRA and then

some.

Thank you, Mr. Chairman, for this opportunity. If there are any

questions, I hope I’m prepared to answer them.

[Prepared statement of Mr. Williams appears in appendix.]

The CHAIRMAN. We’ll have some right after the conclusion of all

the panelists.

Chairman Viarrial, why don’t you proceed.
13

STATEMENT OF JACOB VIARRIAL, GOVERNOR, PUEBLO OF

POJOAQUE, ACCOMPANIED BY GEORGE RIVERA, LIEUTENANT GOVERNOR, PUEBLO OF POJOAQUE FRANK DEMOLLI,

GENERAL COUNSEL, PUEBLO OF POJOAQUE

Mr. VIARRIAL. Mr. Chairman and Senators, thank you for allowing us to come here and give testimony in front of this committee.

When this Senate Committee on Indian Affairs, the entire U.S.

Senate, the House of Representatives and the President all agreed

on the terms of this Indian Gaming Regulatory Act of 1988, there

was and still remains a strict prohibition against State taxation authority on Indian gaming. In fact, IGRA reads,

Nothing in this section shall be interpreted as conferring upon a State authority

to impose any tax, fee, charge or other assessments upon an Indian tribe to engage

in a class III activity.

Today, Senators we face the exact opposite of this national law.

New Mexico and dozens of others States are in fact charging taxes,

fees and other assessments under the guise of exclusivity or revenue sharing. Compact negotiations have become a smoke screen for

extortion. This transparent guise of the Indian Gaming Act costs

gaming tribes millions upon millions of dollars every year. The Indian gaming law you wrote has no mention of exclusivity or revenue sharing. Yet, there is a mechanism to theoretically make these

tribal taxes legal, they do this in spite of your legal mandate to the

contrary.

In other words, Mr. Chairman, Congress told the States in the

IGRA law that they could not impose any kind of assessment other

than regulatory fees. What are the States doing? With the blessing

of the Departmnet of the Interior officials, they are imposing new

taxes on tribes. In New Mexico, it was 16 percent and now it’s 8

percent.

These taxes did not exist before 1988. The States have been imposing these taxes since 1988. And they plan to continue on violating IGRA by imposing multimillion dollar assessments across the

country. I am here today, as my detailed testimony states, to object

to this continuing and costly injustice against the tribes. I also believe, Mr. Chairman, that the interpretations of IGRA by the Department of the Interior go against the good wishes of Congress

when IGRA was passed in 1988.

Despite these Department of the Interior obstacles, IGRA has become the only major successful economic engine for Indian tribes

across this country. This has happened, Mr. Chairman, despite the

good efforts of Congress to encourage other economic activity on Indian reservations. For their efforts to promote tribal economies, I

offer a special thanks to Senators Domenici, Inouye, Campbell,

McCain, Daschle, Dorgan, and Johnson. Pojoaque Pueblo will pursue this illegal revenue sharing in Federal courts.

I only ask, Mr. Chairman, that you stand behind the original law

Congress passed for Indian gaming. I hope you stand behind this

law just as you passed it.

Only you, Mr. chairman, the people here in Washington, DC, can

protect us from the States’—I won’t say inhumane treatment—the

atrocities that the States are doing to the tribes across the Nation.

And I’m again asking you to please, please support us. I think if
14

there’s going to be cure, I think that because we’re so tied up in

courts, almost every provision in IGRA has been violated and is

being taken to court by State Governors, by State legislators, by individuals, and now we can’t do anything because we’re tied up in

court. We just can’t move forward.

I think that a real quick cure is to get the States out of IGRA.

In 1988, the tribes were against the States being part of IGRA. But

the States managed to be part of the regulatory act at least. So

they’ve done nothing, the States have done nothing but create lawsuits for us to tie us up, which cost us millions and millions of dollars. And in addition to those millions of dollars, they want the

compacts to where they can charge us again hundreds of millions

of dollars.

We need your help and your support, Mr. Chairman. Thank you.

[Prepared statement of Mr. Viarrial appears in appendix.]

The CHAIRMAN. Thank you.

Now we’ll go to Mr. Johnson.

STATEMENT OF PEDRO JOHNSON, EXECUTIVE DIRECTOR OF

PUBLIC AFFAIRS, MASHANTUCKET PEQUOT TRIBAL NATION

Mr. JOHNSON. Good morning, Mr. Chairman and members of the

committee. My name is Pedro Johnson, executive director of Public

Affairs for the Mashantucket Pequot Tribal Nation of

Mashantucket, Connecticut.

I am here representing our tribal nation at the request of our

chairman, Michael Thomas. I am a former three term member of

tribal council, a retired police officer and a proud veteran of this

country’s military services, as are thousands of other Native Americans.

I appreciate the work you have done on behalf of all Indian nations, and would like to thank you for giving me the opportunity

to address a very important issue. At this time, I would like to submit my written remarks as part of the record. I would also like to

focus on a few key points in my testimony.

The CHAIRMAN. Your complete written testimony will be included.

Mr. JOHNSON. Thank you.

Mr. Chairman, in 1992, the State of Connecticut and the tribal

nation worked out an historic government to government agreement which is known as the Slots Agreement. The tribal nation

added slot machines to the casino and agreed to share 25 percent

of the slot revenues with the State. Since our slot agreement went

into effect in January 1993, the Mashantucket Pequot Tribal Nation has sent more than $1.6 billion to the State of Connecticut.

Today the revenue derived from the two Indian casinos make up

3 percent of the State’s $13 billion budget. It’s also very important

to note that our agreement with the State allows for an extensive

regulatory role of the State of Connecticut. The cost of this State

regulation is paid entirely by the tribal nation, which is nearly $5

million per year. That covers the salaries of State police officers

and liquor control agents stationed at the casino, as well as special

revenue agents who license our management employees and vendors.
15

Because this was one of the first agreements between the tribal

government and the State government, and because of our success,

the agreement has been scrutinized by many governments, tribal,

State and Federal.

Now I would like to discuss two important points about our revenue sharing arrangement with the State. The first point, how did

we come up with 25 percent. The answer has many facets. We

should look at the context in which this government to government

agreement took shape. To begin with, Connecticut was in the midst

of a deep economic recession which began in 1989. The State wanted revenue, a limit on casino gaming and a significant role in the

regulation of tribal gaming facilities. The tribal nation wanted

something that was going to be fair and honest for both governments. We wanted something that could hold up over time, exclusive slot gaming rights and no expiration date for the agreement.

The second point about the 25 percent rate, this was dictated by

our individual government to government relationship with the

State. Just because 25 percent was appropriate for the tribal nation in Connecticut back in 1992 doesn’t mean it should be the

norm for other State and tribal agreements today. In 2003, many

States are again facing budget deficits. Connecticut is, too. But it’s

not turning to tribal nations to help balance the State deficit. And

this is perhaps a lesson for other States. States should not balance

their budgets on the backs of Indian governments. It’s patently unfair. This goes against the entire history of Indian government sovereignty and our strive for self-sufficiency.

If States wanted to derive more revenue from gaming, they have

their own gaming to turn to, including lotteries and parimutuels.

When my tribal nation was raising hogs and tapping maple trees

for syrup, nobody else cared about our revenue stream. And then

as now, we had to balance our government’s budget, just like any

other government. We are going to stand by our government to government relationships and agreements, as we always have, because

we are proud of the respect and fairness they now afford us.

Thank you. I’ll be happy to answer of your questions.

[Prepared statement of Mr. Johnson appears in appendix.]

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM

NORTH DAKOTA

Senator DORGAN [ASSUMING CHAIR]. Thank you very much. The

Chairman will return in just a moment.

I was unable to be here for all of your presentations, but I’ve had

a chance to read the presentations and appreciate your testimony.

I’m the Ranking Democrat on the Interior Subcommittee for Appropriations, and we’re going to mark up our bill in 5 minutes, so I

also am going to be leaving, and the chairman, as I indicated, will

return.

Let me, if I might, just make a comment about the last piece of

testimony that we heard. We know that there is a shortfall in funding for State governments. We know that this economy has provided significant problems for our Federal fiscal policy, but also for

State governments. They face some very significant shortfalls.

And during the go-go, turbo-charged 1990’s, we saw State governments permanently reduce their tax base by tens of billions of
16

dollars. And Governors and State legislators, quite predictably, enjoyed the opportunity to reduce taxes. But a permanent reduction

in your tax base can cause some real problems. When the economy

turns a bit south or a bit sour. So State governments have some

very significant problems of their own to confront.

When you talk about shortfalls in revenue, it seems to me that

there is no shortfall quite as significant as the shortfall that exists

on virtually all of our Indian reservations. We have, in my judgment, bona fide crises in housing, health care and education among

Native American populations in most of our country. Because of

that shortfall, we ought not, in my judgment, interrupt the first

new stream of income that’s been available to tribes to begin to

amass some revenues with which to address these issues.

I have often, Mr. Chairman, told the story of Tamara Demaris,

the young 3 year old girl put in a foster home. The caseworker who

put her in a foster home was handling 150 cases and did not, as

a result, check out that foster home very carefully. Young Tamara

at age 3 had her nose broken, her arm broken, her hair pulled out

by the roots in a drunken party by the folks who were in custody

of her. And why did that happen? It happened because the money

wasn’t available to provide the social workers to check out the

places where they were putting children.

That was on the Standing Rock Sioux Reservation. That problem

is fixed. That young girl will perhaps be scarred for life from that

experience, but that problem is fixed. We don’t have one person

handling 150 cases with respect to these significant issues affecting

children.

But whether it’s children on that reservation or one dentist working in a trailer serving 5,000 people on that reservation, or I could

describe all of the other issues of housing, health care and education, that represent the crisis. We have a serious shortfall of

funding. Part of that we can resolve, in my judgment, through

more appropriations here, by paying attention to the priorities, and

we certainly should do that. And I’ll be dealing with part of that

in a couple minutes as we mark up the Interior Appropriations bill.

But another part of it, it seems to me, can be addressed with this

new source of revenue that in the last 10 or 15 years has become

available through Indian gaming. And I would not want the States

to very quickly try to grab a portion of that revenue to make up

a shortfall that comes at least in part because they permanently

reduced their tax base in the last 10 to 15 years. The promise to

begin to address these significant issues in health care, education

and housing on reservations can come from the stream of income

from Indian gaming.

I know there are a lot of people out there who want to grab a

portion of that stream of revenue. I for one believe, Mr. Chairman,

that we ought to be very, very concerned about those who want to

take that money away from what I think is the greatest shortfall

in social progress in this country, and that is addressing the critical needs on Indian reservations.

So I just wanted to make that comment. Again, I’m not able to

stay for the rest of the hearing. But I think all of you at the witness table understand that the chairman of this committee, Senator Campbell, has probably unique and unusual insight to under-
17

stand these issues. And the ranking member, Senator Inouye, has

similar interests and background. We couldn’t have in my judgment, two more appropriate people leading this committee than the

chairman, Mr. Campbell, and the ranking member, Senator Inouye.

And I look forward, along with many of my colleagues on this

committee, to work through these issues that you have raised with

respect to the Indian Gaming Regulatory Act. Mr. Viarrial, I appreciated your comments and Chairman Williams and Chairman

Pahmahmie. I really appreciate your coming to Washington testify.

I think it’s very helpful and very important to us, Mr. Johnson.

Mr. Chairman, I’m going to go run to the Appropriations Subcommittee. But these are important issues and thank you for letting me sit in for you.

Senator CAMPBELL [RESUMING CHAIR]. Thank you for your interest and your leadership on trying to make the lives of Indian people just a little better, too. Thank you, Senator Dorgan.

I have to tell you that I wish that the Time Magazine that did

a rather uncomplimentary series of articles a few months ago about

Indian gaming, I wish they could have heard this panel. Because

clearly you are some of the real success stories in Indian Country

and have been willing to share those successes, too. I think we

have to really recognize that those success stories still do not alleviate the problems we have with most Indian people that still face

poverty and unemployment and many other problems.

A friend of mine who’s the chairman of the Southern Utes who,

in fact, when he was born had only a dirt floor in his cabin and

is now the chairman of a very, very successful tribe because of natural resources and a casino and business interests and so on, he

once said in a committee, I can still remember him, he said, they

liked us better when we were poor, when he was speaking about

the opposition that seems to arise when Indians finally get up off

their knees, as I call it, and make a living, find some opportunities.

I remember somebody else telling me one time that ‘‘now they are

forcing us to share. What did they share with us except poverty

and disease?’’

So there’s some pretty strong feelings by some Indian people that

if there’s an opposition to some success among Indian people,

maybe they ought to look at it from an historic standpoint and see

what we lost. Because what Indian people lost in this country is

still a great deal more than anything they’ve gained from economic

development or casinos or any form of successes they’ve had.

I was particularly interested in some of the comments, Zach, Mr.

Chairman, you said that 91 percent of the casino workers are non–

Indians with your casino. Is that correct, 91 percent?

Mr. PAHMAHMIE. That’s correct.

The CHAIRMAN. That’s the largest number I have heard. Also you

said that Harrah’s was the major financial partner when you started?

Mr. PAHMAHMIE. Yes; Harrah’s. We initially sent out an RFP for

three different companies to submit their bids and Harrah’s was

the final selection in that process. They’ve been our management

company since.

The CHAIRMAN. It’s interesting, because when we were working

on IGRA, I was in the House in those days, but many of us on the
18

House and Senate side still can remember all the opposition we

had from, in those days it was from the existing casinos and from

the interests in Nevada, as you remember. Now some of the biggest

supporters of Indian casinos are those very same people, because

they are also becoming investors. They see the real potential with

the growth of Indian casinos.

Did you also say that you’re the largest employer in the county?

Mr. PAHMAHMIE. Yes; that’s correct.

The CHAIRMAN. That is the same where I live, with the Southern

Utes. They are also the largest employers in the county, larger

than the school boards, larger than the hospitals, larger than the

county government. Your tribe began gaming in 1996. What was

the unemployment rate, or give me a couple of comparative numbers, unemployment, high school dropout and so on, before you had

the casino and the successes you’ve had?

Mr. PAHMAHMIE. I’m not sure that I can give you exact numbers.

But I think it would be comparable.

The CHAIRMAN. You were still a little boy. [Laugher.]

Mr. PAHMAHMIE. I was an undergraduate in 1996. But I would

say that it’s probably somewhere on the average, in terms of reservations in the country in terms of unemployment and dropout

rate. It’s something that we still struggle with today.

The CHAIRMAN. Yes; as most tribes do. By the way, I was somewhat teasing a little bit when I said 28. I’m delighted to see such

a young person in Indian country take the leadership of a tribe. I

think that really bodes well not only for your tribe, but the example you can set for many others, too. We need new, young Indian

leaders on the way up to do great things. So congratulations.

Mr. PAHMAHMIE. Thank you.

The CHAIRMAN. You also said 43 percent of the revenues were

dedicated to economic development. Do you have some kind of a development fund, or how do you carry out those development activities?

Mr. PAHMAHMIE. Currently our tribal council is the one that

oversees much of that up to this point. We hope to have a CEO of

economic development in place to take some of that workload off

of us and devote full time efforts toward that end.

The CHAIRMAN. You also, as I understand, have no revenue sharing with the State, and is your State of Kansas also suffering a deficit like most States are now?

Mr. PAHMAHMIE. They are indeed.

The CHAIRMAN. Have they made overtures to the tribe about any

kind of a revenue sharing agreement?

Mr. PAHMAHMIE. We’ve had casual conversations on that subject.

But no substantial negotiations or discussion really to speak of.

The CHAIRMAN. North of you, some of your neighbors in States

north of you are very, very poor tribes. Do you have any system

of sharing or helping poor tribes that are near you?

Mr. PAHMAHMIE. We do not currently have that type of system

in place, no.

The CHAIRMAN. Would you be in favor of some kind of a tribal

development fund, a voluntary tribal development fund between

those tribes who have had a great deal of successes and those who

are very poor?
19

Mr. PAHMAHMIE. I think I would. I have witnessed some of the

more isolated tribes, and I think it would be to the benefit of all

Indian people certainly to have some sort of arrangement in place.

The CHAIRMAN. That’s something that’s been talked about. I

think the big glitch is some people have talked about it in the past

here in the Senate and have wanted some kind of a mandatory

fund. Most of us resist that and don’t support that at all. But if

it was some kind of a voluntary thing, I think most Indian people

would recognize the importance of being able to share this traditional way of Indian thinking.

Chairman Williams, as I understand your testimony, you’re right

off of I–5, is it?

Mr. WILLIAMS. Yes, sir.

The CHAIRMAN. That’s a major thoroughfare, isn’t it, between Los

Angeles going up through California, Oregon and Washington?

Mr. WILLIAMS. We are in a very good location. We’re right 40

miles north of Seattle and about 70 miles from the Canadian border.

The CHAIRMAN. How far are you off of the interstate itself?

Mr. WILLIAMS. A few hundred yards.

The CHAIRMAN. I noticed you’ve had great success with your casino. But some of the tribes I have visited on interstates like I–10

and 40 and 80 and so on have developed some terrific travel centers, too, to encourage the retired people that are now traveling in

the summer in their RVs to also stop. Do you have something of

that nature?

Mr. WILLIAMS. That is in the plan, sir. Right now we’ve cleared

out about 40 acres behind the casino. And just a couple weeks ago,

that had 175 fireworks stands in there. Those people are gone and

that’s where we’re going to put our RV park.

The CHAIRMAN. There’s another, the ones that have done that, I

visited the Ute Mountain Tribe a few weeks ago. They developed

a travel center and an RV park and also tapped into the Federal

laws about hours of driving for over the road truck drivers. With

that travel center they have a place to park trucks, because they

have to stop a certain number of hours during the day, as you

know.

Mr. WILLIAMS. Just about half a mile north of us, there is a truck

stop. We get a lot of truckers that come in and use the casino.

The CHAIRMAN. Good. You mentioned that you do not have revenue sharing but that your compacts do require charitable and community giving.

Mr. WILLIAMS. Yes.

The CHAIRMAN. Do you do that on a case by case thing, or do you

have some kind of a specific percentage of giving? And what counts

as ‘‘charitable giving’’?

Mr. WILLIAMS. We have, there’s a couple of different methods.

We have several different charity accounts. We give to the Red

Cross, YMCA, of course the Boys and Girls Club. We just developed

a four member committee that will be doing all the reviews of all

the requests that we get. It’s stacks.

The CHAIRMAN. I’ll bet you get plenty.

Mr. WILLIAMS. They’ll be going through that and making recommendations to the board as to who we should fund.
20

The CHAIRMAN. Very good. And you do that for Indian and non–

Indian charities?

Mr. WILLIAMS. Yes, sir.

The CHAIRMAN. Very good.

Mr. WILLIAMS. And another thing that we’ve done in our State,

each tribe is only allowed 675 machines. But can have a total of,

I believe it is 3,000. So the tribes that are in the rural areas and

don’t have the traffic, they negotiate a compact with the State and

then we lease their 675 machines. So we’re working with five different tribes back at home. And they get casino moneys when they

don’t operate or own a casino.

The CHAIRMAN. I haven’t heard that before in any of our hearings. I think it’s a good idea.

You mentioned the non-Indian mini-casinos. What kinds of

games or machines can you offer that they can’t offer?

Mr. WILLIAMS. Right now, they have table games. As it stands

today, they do not have any machines. But they are pushing the

legislature very hard to get hold of the machines that we fought

a long time to get.

The CHAIRMAN. I’ll be they are. Has the State tried to raise the

taxes on those mini-casinos?

Mr. WILLIAMS. We’ve met with one of the senators from the State

a couple days before coming here, and I think they’re going to try

to push that issue.

The CHAIRMAN. Chairman Viarrial, you used the word ‘‘atrocity’’.

That might have been a little stronger than I would have used. But

I certainly understand your position and your feeling about it. In

1988, when we framed up IGRA, I think your concerns really were

met in IGRA. But after the Seminole decision, it began to change,

as you probably know. In 1988, between 1988 and 1996, most of

the lawsuits were initiated by tribes against the States. After the

Seminole decision it kind of went the other way, as you probably

know.

In the 1997 compact, as I read your testimony, your Pueblo is

still operating under a compact agreed to in 1997. Other tribes and

other pueblos in your State of New Mexico are operating under the

new compacts that were agreed in 2002 or 2001. That was brought

about by an awful lot of pressure a couple years ago. I remember

in fact a whole Governor’s election hinged on that particular issue.

I remember very distinctly how active the tribes were in that election.

Other than the revenue sharing provisions of the 1997 compact,

which would have been a better deal for you, the 1997 compact or

this new one?

Mr. VIARRIAL. The new one in 2001, because the past, the other

one we would have had to pay 16. And off the top, before any expenses. So 8 percent would be a lot better.

The CHAIRMAN. But you still operate under the 1997 one?

Mr. VIARRIAL. Yes, sir.

The CHAIRMAN. You’re paying a bigger percent than you would

under the other?

Mr. VIARRIAL. We’re still paying, a couple of years ago, about

three years ago, mainly because for two reasons, because we knew
21

it was an illegal payment, and the other one, see I lost my train

of thought here.

The CHAIRMAN. You stopped paying, you said?

Mr. VIARRIAL. Right. And there’s no exclusivity. And so we

haven’t paid anything to the State in about three years. What I

was going to say that is in addition, our tribal programs suffered.

So it was either give our money to the State or continue our tribal

projects, our social services, all those things that are helped by the

gaming revenue.

The CHAIRMAN. Are you in some litigation now with the State?

Mr. VIARRIAL. Yes, sir; most of the other tribes signed the compact in 1987, I mean 2001. But Pojoaque Pueblo chose not to. And

the Attorney General was given the authority to negotiate with us.

The CHAIRMAN. In that lawsuit, what has been the position of

the Secretary of the Interior, the Department of the Interior? Have

they helped your or interceded or taken a position in that lawsuit?

Mr. VIARRIAL. Maybe I can ask Mr. Rivera. George is our Lieutenant Governor.

The CHAIRMAN. Yes, Mr. Johnson.

Mr. RIVERA. Mr. Chairman, the Department of the Interior, we’re

trying to make the Department of the Interior part of the lawsuit

for accepting the compacts and accepting the illegal provision. And

it’s all still it the process right now.

The CHAIRMAN. And let me correct that for the record, you’re Mr.

Rivera.

Mr. RIVERA. Yes; the lawsuit was brought on by the State

against the tribe for not paying the revenue sharing.

The CHAIRMAN. When do you expect some final conclusion of

that?

Mr. RIVERA. I don’t have a date on that yet.

Mr. VIARRIAL. May I add, Mr. Chairman, that Governor Richardson is trying to resolve the problems. But it’s very new and we

don’t know how it’s going to go.

The CHAIRMAN. In that lawsuit, has the State been demanding

back payments that you haven’t paid?

Mr. VIARRIAL. Yes; they are saying that we owe them $21 million

now. And if we continue until we negotiate with them, that’s 16

percent, the clock on that continues. So let’s say we’re to settle next

year or the year after that, we will owe them about $30 million.

The CHAIRMAN. If you had to pay that, wouldn’t that do some

devastating harm to the tribe?

Mr. VIARRIAL. Tremendous, tremendous harm.

The CHAIRMAN. Have any other Pueblos, the tribes had to stop

gaming because of the size of the revenue sharing provisions?

Mr. VIARRIAL. I don’t know, Mr. Chairman, I really haven’t

talked to them about it. But definitely, I’m sure everybody’s suffering the way we are.

The CHAIRMAN. Okay. Well, thank you. I hope that will be resolved to the tribe’s benefit.

Mr. Johnson, I think everybody is familiar with the success of

the Pequots. And also familiar with the wonderful feeling of sharing. I’m well aware of the money that the Pequots have donated

to the Museum of the American Indian, which is going to go a long

way in helping them reach their goal of having their grand opening
22

next year, September the 10th if I’m not mistaken. I know the

Pequots will be there and should be there.

You said, as I understood you, 3 percent of the whole State budget is now really made up with compact payments alone, is that correct?

Mr. JOHNSON. Yes.

The CHAIRMAN. And when you think in terms of the whole economic picture of the Pequots, the employment, the taxes the employees pay on income taxes and so on, do you have any kind of

a ball park area of what that means to the State of Connecticut?

Mr. JOHNSON. There was a study that was conducted by the University of Connecticut in, I believe, 2000 that I think you’d find

very interesting. One of the points that the study brought out was

that directly or indirectly, the tribe has been responsible for 43,000

jobs in the State of Connecticut. I think that speaks for itself.

The CHAIRMAN. And 11,000 being with the——

Mr. JOHNSON. With the enterprise itself.

The CHAIRMAN. The ripple effect would be—43,000 jobs.

Mr. JOHNSON. Right.

The CHAIRMAN. Well, as I mentioned earlier in my opening statement, we’ve had some local elected officials come into this Committee and complain that you weren’t doing enough. I told them they

needed a better lobbyist in their State capital. I think you probably

would agree with that, because it seems to me you’re paying a lot.

Mr. JOHNSON. yes.

The CHAIRMAN. Your compact has no expiration date, is that correct?

Mr. JOHNSON. That’s correct.

The CHAIRMAN. Is that one of the reasons the tribe felt that a

25 percent revenue sharing rate was appropriate? Because that’s

rather high compared to most of them.

Mr. JOHNSON. Yes; back then that was the case. As I stated in

the oral testimony, this was one of the primary factors. We wanted

something that was going to be lasting.

The CHAIRMAN. Sure. That wouldn’t get jacked up at a later date

as is being done in some States.

Mr. JOHNSON. Right.

The CHAIRMAN. Well, I have no further questions. We may have

some questions in writing from some of the other members of the

committee, and we’ll send those to you if we do. But I want to

thank this panel for appearing. You have some terrific success stories, and I wish you every continued success. Nice to see you.

We’ll now go to the last panel, which will be Brenda Soulliere,

chairperson of the California Nations Indian Gaming Association,

from Sacramento, my old hometown; and Frank Chaves, the executive director of the New Mexico Indian Gaming Association, from

the Pueblo of Sandia in Bernalillo.

Brenda, did I pronounce your last name correctly or wrong? It’s

pronounced like a French word?

Ms. SOULLIERE. The political answer is closer than most. It’s

Soulliere. [Laughter.]

The CHAIRMAN. Okay. Would you go ahead and proceed? Do you

live in Sacramento, by the way?
23

Ms. SOULLIERE. No; I don’t. I’m from Southern California, I’m a

member of the Cabazon Band of Mission Indians. But it feels like

I live in Sacramento.

The CHAIRMAN. Okay, the office is there. Go ahead and proceed.

STATEMENT OF BRENDA SOULLIERE, CHAIRPERSON,

CALIFORNIA NATIONS INDIAN GAMING ASSOCIATION

Ms. SOULLIERE. I just wanted to say thank you, Chairman Campbell, for the vision and insight, for having the panels and having

this hearing.

The CHAIRMAN. And I need to tell you that we’ve been notified

that we’re going to have two consecutive votes in about 10 to 15

minutes. So if you don’t want to wait here for like an hour until

I get back——

Ms. SOULLIERE. In the interest of time I will summarize. And

that’s all I’m going to say on that. I’ve submitted written testimony.

The CHAIRMAN. That will be included in the record.

Ms. SOULLIERE. As I had said, I’m a member of the Cabazon

Band of Mission Indians. I am the daughter of John James, who

is the chairman of the Cabazon Band of Mission Indians. In a conversation we had the other day, I am about number six in generations of leadership in the Cabazon Band, just direct inheritance

moving down the line.

Just a little background, I chair the California Nations Indian

Gaming Association based out of Sacramento. We have had a lot

of interesting times in California. I’m sure everyone’s heard many

things about what’s going on in California. So I don’t need to cover

that.

But I think probably the biggest area or the biggest flag we can

wave right now is that employment in California in tribal governments are the only double digit growth industry. And that’s not

just gaming, it’s the tribal governments themselves, any kind of

economic development the tribes have had in California, the only

double digit growth. All the other industries are may 2 or 3 percent

or completely even, or below. So we are already doing our fair

share in trying to keep California’s head above water.

A couple of the things that we just needed to talk about real

quick, about the revenue sharing, the problem with the process

really is that since Seminole, tribes do not have any leverage. They

don’t have leverage in being able to compact. One of the examples

right now that’s going on in California, one of the extremes, actually, because there’s kind of three levels, there’s one extreme, the

other extreme and then somewhere in the middle.

The leverage, we have some tribes that cannot get the same compact that 62 tribes have signed. And there are some 10, 20 tribes

that want the exact same compact with the exact same terms. And

the Governor won’t sign them, he’s been putting them off for about

two or three years. And no one can really figure out why it’s a different, I guess, excuse, every time he’s asked. But as of last week,

he came to our membership meeting and he said within 3 weeks

he will have definitive answers. So we’re not sure what that means,

but we will find out in a couple more weeks.
24

Recently, the Governor, I guess about 4 months ago, the Gov- ernor had requested $1.5 billion in renegotiations of the compacts

which are due to happen some time this year. There were what I

call horse laughs up and down the State when that number came

out. It was just not possible. He was assuming that we were making $6 billion in California per year and he wanted the 25 percent

of that which was the $1.5 billion. It was not going to happen,

number one, that’s not what we’re making. The numbers came out

for 2001 which was $2.9 billion. So that’s rounded off to 3, he

wants 1.5, he wants half of everything that we bring in. That’s

where the horse laughs came from.

The recent one about 1 month ago, he came out and said that he wants $680 million from the tribes. I don’t think that’s going to

work either. There are already two funds that the California tribes

pay into. One is a revenue sharing trust fund which is moneys that

are shared with the non-gaming tribes. Only half of the tribes in

California game. We have 107 tribes and there’s only 53 that have

gaming establishments. And through their licensing procedures

they’re sharing revenues with the non-gaming tribes to help them,

to strengthen their governments. That is situation specific to California.

There’s another fund which is a special distribution fund that

has several different, what’s the term I’m looking for, several different ways to use that fund. One of those ways is to backfill that

fund. That is being considered in the State legislature right now.

Another is for mitigation and those impacts. So we’re waiting for

that to be taken care of.

Some of the problems that we’ve had is no consultation. The Gov- ernor just comes out, the $1.5 billion number was a problem of no

consultation. He just came out and said, well, actually we read it

in the paper. And then if there’s an issue that we have with another entity or something, he’s just put out executive orders without talking to tribes, without taking any determinations on what

the real issues are. And that’s been a problem for us.

But what we have seen though, there are, we feel, ways to resolve these. We feel that the Federal Government has a fiduciary

duty as a trustee and we believe that there should be some guidelines for approval or disapproval of the compacts. Things are just

going around and around right now in California, and that has to

do with the revenue sharing. Obviously that has to do with the

budget deficit, which is approaching $40 billion in California.

There’s a big Governor recall issue going on in California. So everything is up in the air, the renegotiations basically have stalled. No

one’s talking right now, everybody’s worried about the political climate.

What we need is to get a little more from Washington to the Governors to encourage them to come together with tribes. There are—

it just really gets old being looked at as a cash cow. And that’s how

tribes are getting looked at. I believe the other gentleman used the

word extortion. And that’s what’s happening.

Something I always like to say, we’ve gone from, and it’s all

stereotypical, we’ve gone from the drunken dumb Indian to the rich

Indian. I don’t think there’s any other segment in society that’s

been able to do that. [Laughter.]
25

The other has to do with the use, the other concern is that there

should be a direct causal connection between the State and the revenue sharing and the Indian gaming. Now, that relationship has to

do with exclusivity. The State wants us to pay revenue sharing for

exclusivity. There’s one little part that they forgot. They did not

bargain exclusivity at all. We fought for that. We ran two State initiatives and we spent time, we spent money, we changed the constitution of California and we got our own exclusivity, and now the

State wants funding to keep that exclusivity.

If there’s not that direct causal relationship, it creates cynicism.

I myself have become cynical over some of the things that the State

has done. For example, the California lottery, what they did is they

are going to, they sold the lottery to the people and they’re going

to use that money to bolster education. And they did that. But underneath, they cut all the education and took it out of there.

So they’re basically, even with the schools growing, but then they

took the money out from underneath. And that’s made the people

of California very cynical. We do still have a very good set of numbers for California Indian gaming, up in the 65 percent approval

rate. That’s because the people of California feel that we’ve been

responsible with our budgets, with our funding, with what we do

with our tribal governments.

The CHAIRMAN. Brenda, I hate to interrupt you. That was the

first call to vote, which means we have about 15 minutes to get

there. So I’m going to have to ask you to wrap it up so that we

can at least hear from Mr. Chaves and I don’t know whether I’ll

have time to ask questions or not.

Ms. SOULLIERE. Okay, I will do that. Just real quickly, there are

ways to make these things work without amending IGRA. One of

my main points was why add to the law when the law is not being

followed as it is. I think it needs a little bit more of a push toward

the States. You need to be following what’s going on here.

The recommendation is that the Federal Government step up to

the plate and take seriously its fiduciary duty to the tribes. Let the

States know that they’re going to take a proactive approach when

it comes to this fiduciary duty to the tribes in relation to IGRA.

Another recommendation is to adopt guidelines that demonstrate

the revenue sharing and the mitigation demands and have a direct

causal relationship toward that. And again, we can all do this without amending IGRA. If you look at the problems, this is something

that we discovered, if you take a really good look at the problems

and take time to analyze them, you will see the solutions of those

problems within the problems themselves.

So I want to thank you for the opportunity to be able to speak

to the committee and I’ll be happy to answer any questions, either

today or in written followup. Thank you.

[Prepared statement of Ms. Soulliere appears in appendix.]

The CHAIRMAN. Thank you.

Mr. CHAVES.

STATEMENT OF FRANK CHAVES, CHAIRMAN, NEW MEXICO

INDIAN GAMING ASSOCIATION

Mr. CHAVES. Mr. Chairman, thank you for the opportunity to

present testimony before you today. I appreciate this opportunity
26

to talk about the negotiation process and its relationship to revenue sharing and the use of revenues by tribal governments.

I have a written testimony that I’d like to make sure is submitted for the record.

The CHAIRMAN. It will be included.

Mr. CHAVES. It includes a memo that was written about the history of gaming in New Mexico. I think it speaks to a lot of the

trials and tribulations the perseverance of tribal leaders in New

Mexico to try and secure their people’s economic future. And that

struggle continues, as Governor Viarrial has so stated in the prior

panel.

I am the Chair of the New Mexico Indian Gaming Association

and have served with tribal leaders since 1986. So I’ve lived this

history that you will read about in the attached statement. Compact negotiations that involve revenue sharing in New Mexico and

across the Nation have obviously been very complex and controversial, sometimes very devisive. But our current position is that if we

pay revenue sharing that it has to be in exchange for some consideration by the State. Currently, that consideration is exclusivity.

The issue is, how exclusive is that ‘‘exclusivity’’. In New Mexico,

that’s the question which we still need to resolve.

In our view, our bargaining position in the negotiation process

and in revenue sharing has been limited by the lack of judicial and

administrative forums, both at the State level and at the Federal

level. That is due to our inability to sue the State and due to the

fact that the Department of the Interior’s class III gaming procedures have been challenged and remain not a feasible forum for

our issues.

As a result of this, this is a real problem, is that we are thrown

into the political processes of the State, State political processes.

And along with that, the influence of special interests. You will see

in the compacts how this occurs. There are provisions in the compacts that were pushed very hard by special interest groups, trial

lawyers, insurance agents, and so on.

In 1987, and prior, when Congress was debating the Indian

Gaming Regulatory Act, the States really demanded a voice in Indian gaming. And with that demand, and with Congress giving

them consideration in the compacting process, that means that

States should have a responsibility to respond as well in terms of

trying to define a way to approach tribes and negotiate with them.

In 1999, the State of New Mexico passed the Compact Negotiation Act. It was very helpful in defining a process and the authorities by which the State would negotiate with a tribe on a government-to-government basis. If it’s carried out properly, the Compact

Negotiation Act should provide an environment in which good

faith, arms length negotiations should occur. However, it doesn’t

guarantee success. Part of it is again the political processes that

we’re thrown into, and sometimes with special interest groups.

We do have a new administration in New Mexico and there’s

much hope for greater advancements in government to government

relations and better policy for our tribes in New Mexico. We have

had quite a history of compact negotiations. Just summarizing very

briefly, from the point that the Indian Gaming Regulatory Act was
27

passed in 1988, there simply no negotiations. We couldn’t get any

real responses to our negotiation requests.

In 1995, we did negotiate with then Governor Gary Johnson. We

were able to obtain a very favorable compact. The highlights of that

compact are as follows. We had a 5 percent revenue sharing, but

it had a local share to local governments. And that local share

could go to those governments with the tribes choosing.

There were limited numbers of slots at racetracks. Essentially

that began the erosion of our exclusivity, so to speak. We thought

it was reasonable at the time because the horse racing industry

was really a dying industry and needed an injection of revenue and

there were a lot of New Mexicans involved in support industries,

agriculture and others. So the tribes, being somewhat generous,

weren’t really realizing the impact of that over the long term and

how the race tracks would eventually really make inroads, gaining

more and more gaming in the State.

A very ideal term that these compacts had was automatic extensions. And this was very key because it provided an ideal structure

for long term financing. As we look at the need for financing for

infrastructure and economic diversification, these types of terms

were very, very useful toward that.

Immediately after these ‘95 compacts were actually approved by

the Department of Interior, they were challenged first in the State

courts and then ultimately defeated in Federal courts. This led

then to a great deal of controversy and legal wrangling, until 1997,

when we had 1997 compacts, which were essentially legislated,

they were not negotiated. These are the compacts that contained

the 16 percent revenue sharing demand. They had 9 year terms,

therefore the potential for long term financing was lost. And there

were no penalties for slot expansions at the race tracks.

So we were beginning to see an erosion of the benefits of the

1995 compacts. We were beginning to see less and less benefit in

the ability to finance over the long term.

In addition to that, regulatory costs were added to the compacts.

Again, as I say, they were legislated so the tribes were not at the

table. They had to defend themselves through hearings and so

forth. And one of the most onerous provisions, in addition to the

16 percent, was that regulatory costs were added to the revenue

sharing, and this cost millions and millions of dollars to the tribes.

Yet there was no relation to the actual cost to the State in the regulation process.

In 1999, as I previously stated, the Compact Negotiation Act was

enacted by the State legislature. I think it would be helpful to have

the Congress take a look at examples like this and encourage

States to look to forums or ways, processes and means by which a

tribe may approach a State and really understand how that negotiation process happens with the State. It’s been a very, very looming and large issue prior to 1999 for tribal governments.

As I said, in 1997, these compacts were legislated. And that led

to a series of attempts to negotiate. The State would not respond

to those negotiation requests, primarily because they were receiving 16 percent revenue, they had no fear of being sued and there

were no forums to take them to. We tried using the arbitration pro-
28

visions in the compacts themselves and the State supreme court

basically quashed that effort.

So we stopped making revenue sharing payments. That led to

the State suing us on June 13, 2000. They demanded payment or

they said, stop your operations. Shortly thereafter, there was a lot

of controversy and evolving out of that litigation were the 2001

tribal-State compacts. These were negotiated under the Compact

Negotiation Act.

These current compacts have an 8-percent revenue sharing.

There is a provision by which small casinos or operators making

less than $12 million pay 3 percent of the first $4 million and 8

percent thereafter. So we did try and negotiate for the smaller

gaming tribes some relief, even at the 8-percent level.

We do have what we term substantial exclusivity. It’s a little soft

in terms of what that means. But it is bargained for exclusivity.

These compacts end on June 2015, which means that they’re good

in terms of trying to get some shorter term financing. But we still

have the problem of trying to obtain long term financing, again, for

that economic diversification and longstanding infrastructure needs

and economic development.

The revenue sharing dollars that go to the State go into the general fund and we’re not quite sure beyond that where they go.

[Prepared statement of Mr. Chaves appears in appendix.]

The CHAIRMAN. My apology, I was just told that we only have 5

minutes to get to the Floor for that first vote. So I’m going to have

to finish up and just read your testimony as I have the time. But

I wanted to thank you.

I do have some questions for each of you. I’m going to submit

those in writing to you, because I am interested in getting answers

on it. Because the reason for these hearings really is to see if and

how we can reform IGRA and whether we really want to open up

the whole thing. Because there’s always some kind of a backlash

when you open it up. As you know, the States are going to have

plenty to say, too.

But I do want to thank you for appearing and apologize that I’m

going to have to leave. Sometimes when there’s two or three of us

here, we kind of spell each other so one can go vote while the other

one comes back. In this case I’m all alone, so I’ll just have to stop

it there and tell the people in the audience and the panelists too

that we’re going to keep the record open for two weeks, if you have

any additional comments, or anyone else has some comments you’d

like to submit, please do.

With that, I will submit some questions in writing, and the Committee is adjourned. Thank you.

[Whereupon, at 11:42 a.m., the committee was adjourned, to reconvene at the call of the Chair.]
(29)

APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF FRANK CHAVES, CHAIRMAN, NEW MEXICO INDIAN GAMING

ASSOCIATION

Chairman Campbell, honorable members of the committee with special acknowledgement to our own Senator Pete Domenici, thank you for the opportunity to testify before you today regarding the Indian Gaming Regulatory Act (IGRA) with a

focus on the process by which States and Indian tribes negotiate agreements on revenue sharing and the use of gaming revenue by tribal governments. The topic of negotiation of revenue sharing agreements is timely for certain tribal governments in

New Mexico as we are likely to have further discussions with the State concerning

the compacts negotiated in 2001 in the near future. In addition, we have two tribal

governments engaged in litigation over 1997 Compact revenue sharing terms.

In New Mexico there are 22 tribal governments. Tribal communities in New Mexico remain a stronghold of traditional and cultural systems and beliefs. There are

19 Pueblo governments, the Jicarilla and Mescalero Apache Nations and the Navajo

Nation. Thirteen of these tribal governments operate class III Indian gaming, 2

under the 1997 Compacts and 11 under the 2001 Compacts.

Compact negotiations for class III Indian gaming in New Mexico have a complicated and divisive past. In 1988 and 1989 the State did not respond to our request for compact negotiations. From 1990 to 1994 negotiations failed to produce a

compact. The 1995 compacts negotiated and approved in accordance with the IGRA

were defeated in the courts first by the New Mexico Supreme Court and then by

the Federal Courts. The 1997 compacts approved under the ‘‘no action’’ provisions

of the IGRA were not negotiated but legislated by the New Mexico Legislature; the

compacts remain subjects of litigation for two tribal governments and the state. Finally, the 2001 compacts evolved out of litigation initiated by the state to enforce

revenue sharing payments; a fact that is acknowledged in the compact ‘‘Purpose and

Objectives’’ Section H., ‘‘To settle and resolve certain disputes that have arisen between the Tribes and the State under the provisions of the Predecessor Agreements.’’ Although they evolved out of litigation, they were the first compacts negotiated under the State’s Compact Negotiation Act of 1999 and were government-togovernment negotiations. This complex history and controversy over compact negotiations and revenue sharing are in part related to IGRA’s failure to secure a level

bargaining position for tribes with states as contemplated by Congress. As a result,

we are thrown into the State’s political systems in the negotiation process.

In our testimony we hope to impress upon the committee that in large part the

IGRA and Indian gaming in New Mexico is working to provide a better quality of

life for many Indian communities. Indian gaming is also making significant contributions to the larger New Mexico economy in the form of jobs, commerce and additional tax revenue. We are doing this without falling victim to the ills and accusations sensationalized in recent Time Magazine articles on Indian gaming.

We have made significant progress in economic development and tribal state relations, but there is much to be done. We have a new administration in New Mexico

that has manifested a policy willingness to work with tribal governments on a gov-
30

ernment-to-government basis. I hope we can benefit from this in securing our economic development foundation, which in my opinion is currently a soft foundation

based on gaming compact term limits and the potential for state policy changes that

could challenge tribal tax and other revenue streams.

Compact Negotiations and Revenue Sharing

It is unlikely that anyone will ever be able to explain all the complexities and the

incredible history of Indian gaming and compact negotiations in New Mexico. Since

1985 I have had the honor of working with many strong traditional tribal leaders,

tribal councils, attorneys and consultants. I still cannot imagine the difficulty they

have in taking all these complex issues and history and thoroughly relating them

to a decision on a current gaining issue. But, just as Congress and state legislatures

must keep abreast of issues so too must tribal leaders. I have included as an attachment to this written testimony, a memo written by a tribal attorney to a Pueblo

Governor in just such an attempt to keep abreast of compact and revenue sharing

issues in New Mexico. The memo is extensive but does not begin to exhaust all of

the history or complex political, legal and policy questions tribal leaders had to face

from 1995 to 2001. I hope it gives the committee a better understanding of the perseverance of New Mexico tribal leaders and what they continue to encounter in trying to secure their people’s economic future.

Our experience in revenue sharing began in 1995 with the first compacts approved by the Department of the Interior. The revenue sharing rate approximated

the state’s gross receipts rate at the time and was inclusive of a local government

share that would go to local non-tribal units of government of the tribe’s choosing.

In the latter stages of completing the negotiations of the compacts slot machines at

racetracks were put on the table and market exclusivity for tribes began to erode.

Then New Mexico Governor Johnson wanted to provide a limited number of slot machines at horse racetracks because the pari-mutual horse racing industry was dying

and needed an injection of revenue to survive. This appeared reasonable to tribal

leaders at the time since horse racing was associated with New Mexico agriculture

and support industries. Tribes and the State agreed that revenue sharing would be

reduced or eliminated if the limited slot machines at the racetracks were to increase. In addition, the compacts had in essence an automatic renewal provision giving them a near ideal structure for using gaming revenue for long term financing.

Little was anticipated of the ability and the push in latter years by the racing industry to increase slot machine activities and compete with tribal government gaming operations and little was anticipated of the compromise of benefits found in the

1995 compacts.

The 1995 compacts were immediately challenged in the state courts and ultimately were defeated in the Federal courts. The lawsuits and political activity that

took place between 1995 and 1997 made Indian gaining in New Mexico the single

most reported issue of that time. Indian gaming was gaining overwhelming support

from the public but not from the legislature.

In the 1997 compacts, the revenue sharing provisions were negotiated among legislators in a sort of bidding war and feeding frenzy among special interests with no

place at the table for tribal leaders to negotiate on their people’s behalf. It was only

working through friendly and sympathetic legislators that the revenue sharing demands did not end up higher than the 16 percent of net win that the legislature

eventually chose. While revenue sharing demands increased, gone were the market

exclusivity provisions and gone was the potential to obtain long term financing for

basic infrastructure and economic diversification. In addition the regulatory payments to the state, which had absolutely no relation to the State’s cost of regulation,

amounted to millions of dollars in added payment. Included in the compact was an

arbitration provision that, to date has been ineffective in resolving revenue sharing

issues. Tribal leaders and those representing tribal interests could only watch in

anger and frustration as this process continued with no viable judicial or administrative forums available. The anger and frustration of this process was shared by

many non-Indian employees, vendors, and many others who were opposed to the

continuing assault on Indian rights and the economic discrimination that was taking place right before their very eyes.

After the 1997 compacts were approved under the no-action provisions of the

IGRA, tribes continued their attempts to regain reasonable compact terms by requesting negotiations. In addition, efforts to use the arbitration provisions in the

1997 compacts to address the 16 percent revenue sharing provision have to date

been fruitless and furthered suspicion that the state’s judicial forums were not exactly blind or unbiased. In 1999 the State did pass a law that was to become a

means by which tribal leaders could negotiate with the State on a government-togovernment basis. The Compact Negotiation Act of 1999 established a process and
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defined the authorities by which the State would address requests by tribes for negotiations of compacts. While it does not guarantee a successful negotiation it goes

a long way in helping the tribal leaders understand just who the ‘‘State’’ is in negotiating a compact as required under the IGRA.

When properly carried out, the Compact Negotiation Act of 1999 should produce

a compact negotiated in a bilateral good faith environment. Under the act, either

the State or a tribe may initiate negotiations by providing notice. The Governor of

the State can appoint a negotiator and the legislature must establish a joint committee on compacts. Negotiations are conducted with the Governor or the Governor’s

representative and taken to the joint committee on compacts for review and recommendations. The committee gives its recommendations to the full legislature and

by joint resolution the full legislature may accept the proposed compact. There is

a provision in the act that permits the Governor of the State to accept a compact

or amendment to a compact from a tribe if the compact or amendment is the same

as a compact or amendment that has been approved under the Compact Negotiation

Act. What the 1999 Act did not do however was eliminate the involvement of special

interests’ influence which remains an unofficial part of the negotiation process.

Unfortunately the negotiations under the act did not bear fruit in 2000. As all

of the attempts to negotiate were unsuccessful, and as the administrative and judicial forums simply became unavailable, the tribes decided that the only way to get

the state to address the revenue sharing issue was to stop making revenue sharing

payments. The Mescalero Apache Nation never made any payments under the 1997

compact and as frustrations mounted some Pueblos also decided to stop making payments. Finally in 2000 after negotiations failed under the Compact Negotiation Act,

the remaining tribes that had been making payments stopped doing so. Shortly

thereafter the Attorney General filed a lawsuit on June 13, 2000.

Pojoaque Pueblo and the Mescalero Apache Nation remain litigants in the still

unresolved suit over the 1997 compacts. Mescalero’s response to the lawsuit was to

ask the Court to force the arbitration proceeding but the Court has yet to respond

and the arbitration provision of the 1997 compact remains untested as a means to

resolve revenue sharing questions. The lawsuit posed significant risk for both the

State and tribes. These risks. were a factor in helping to move both the state and

eleven tribes toward a successful negotiation in 2001.

The 2001 compacts were negotiated under the provisions of the Compact Negotiations Act. Under these compacts the tribes enjoy the unrestricted right to engage

in all forms of class III gaming and substantial market exclusivity. For this substantial market exclusivity, the tribes pay the state 8 percent of their net win on slot

machines. If a tribe has a smaller casino generating less than $12 million in net

win annually, they pay 3 percent of their net win under $4 million. Under State

statute limited operations of slot machines at horse racetracks and veteran/fraternal

organizations is permitted, but these entities are not permitted to offer table games.

The compacts terminate midnight, June 30, 2015.

The State required affirmative Federal approval of the 2001 compacts to ensure

it would receive its future revenue sharing payments. First, the lawsuit filed by the

State for payment of revenue sharing had to be settled and certified by the Attorney

General. The certification requirement had to be met before the Governor of the

State could send the compacts to the Secretary of the Interior for the Federal review

process. Both of these requirements were met.

In the recent 2003 State legislative session, non-tribal gaming interests at horse

racetracks proposed state legislation to increase their market share through expanded hours of operations. This legislation did not pass in 2003 because tribes

again entered the political arena to defend their limited market exclusivity. With

the support of the Governor and other state legislative leaders this effort was

turned back in favor of continuing to work together to improve Tribal State relations under the compact. Continued assaults on our market exclusivity and other

factors will likely lead to negotiations to amend the 2001 compacts.

There has been much controversy over the issue of revenue sharing. Questions

and controversy still remain, yet it appears that revenue sharing is becoming a necessary ingredient in securing gaming compacts. And while the controversies remain,

it is better to have controversy than poverty and neglect.

Indian Gaming is Working in New Mexico

While the political and legal history of Indian gaming in New Mexico is remarkable in itself so too is the history of job creation, commerce and a better quality of

life for many Indian communities. Historically New Mexico has performed poorly in

many areas of economic development and educational attainment. According to the

U.S. Census 2000, New Mexico ranked 43d in the Nation average teacher salary,

3d in the Nation in violent crimes per 100,000 population, 47th in the Nation in
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per capita personal income, and 4th in the Nation in unemployment. The Native

American population in New Mexico as a group is poorer, less educated and more

affected by many of the social ills that result from poverty.

In recent years tribal governments engaged in gaming have begun to move from

the picturesque poverty so often seen in the cultural tourism promotions of the past

toward prosperity and greater contributions to the state’s economy. The level of success does vary from tribe to tribe as would be expected in different market areas,

but progress large and small has made for a better quality of life. This progress is

found in economic development and community development.

Our gaming operations are economic engines providing jobs to many New Mexicans, Indian and non-Indian alike. In Indian communities where populations are

relatively large and unemployment is high, gaming operations have provided jobs

close to home permitting many to enter the job market for the first time and provide

basic necessities of life for their families in Indian communities with smaller populations, a larger percentage of employees are drawn from surrounding communities,

both Indian and non-Indian. In a representative year, tribal gaming enterprises paid

out an estimated $91.7 million in direct gaming employment wages and about $16.7

million in added employee benefits. In this largely service industry wages are supplemented by tips that further increase job earnings. Indian gaining has provided

approximately 6,000 direct gaming jobs. If this number is combined with the approximately 6,000 additional jobs in other tribal enterprises and tribal governments,

tribal governments provide over 12,000 jobs. This makes tribal governments with

gaming operations the third largest employer in the State behind Kirtland Air Force

Base and the University of New Mexico.

We have not estimated the economic spin-off effect in additional jobs and commerce created by our direct employment, but the contribution is significant. The

gaming operations create additional commerce through the purchasing of goods,

services and sponsorship of events in surrounding communities. In a representative

year, more than $120 million was spent on the purchase of goods and services.

Gaming revenues that flow to the tribal governments are used, as intended by

Congress, for governmental purposes. Gaming revenues help tribal governments

function. Funds are used for educational programs and scholarships, public safety,

water and waste water management, the preservation and protection of land, environmental programs, health and health education, housing repair and development,

care for the elderly, tribal court systems, programs for drug and alcohol abuse, culture and language preservation programs and capital improvement programs that

are just beginning to address long neglected infrastructure needs. I have noted

below just a few examples of the use of gaming revenue by tribal governments in

New Mexico.

At Tesuque Pueblo, the Bureau of Indian Affairs is responsible for a day school

that teaches the elementary age students of that Pueblo. But the school, an aging

adobe structure that is more than a century old, is in danger of falling apart, and

only through continual maintenance provided by the Pueblo and the poorly funded

BIA education department has the school stayed open. The BIA has a multi-billion

dollar backlog on school repair and construction, and the Pueblo, tired of trying to

wade through the bureaucratic backlog, decided to spend its own revenue on building a school that should have been provided by the Federal Government. Tesuque

Pueblo also used gaining dollars to restore much of the historic and living central

plaza area homes.

At Isleta Pueblo, where health problems have troubled the community for decades, the Tribal Council created a wellness center and a recreation center to teach

healthy lifestyles and a state-of-the-art health center to treat many problems of its

people. Isleta health and recreation centers offer the hope that the children of Isleta

learn healthy lifestyles and life choices early in life, and give seniors options for a

healthier, active lifestyle well into their older years. This recreation center includes

a full Olympic size swimming pool, which is used not only by those on the Pueblo

but by neighbors in the surrounding area.

At Sandia Pueblo, my Pueblo, we have also built a health center and a wellness

center, but we are especially proud of our education program. Any family at Sandia

Pueblo can send their children to any school, and the tribe pays for the cost of that

education. This includes preschool through college. All that is required is that the

students finish their schooling. We have used gaming revenue to establish education, health and housing trust funds for the long term; we also built a state-ofthe-art wastewater treatment plant for our master planned development area and

our residents. Just recently the Tribal Council approved the purchase of a computer

for each household on the reservation for educational and communication enhancement.
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At Acoma Pueblo, the tribe has used its revenue to expand its economic base in

the tourism industry. The Pueblo replaced the museum and cultural center, built

a hotel and first class travel center, and purchased culturally sensitive land. Acoma

is the largest employer in Cibola County, which is among the poorest counties in

the State.

At Laguna Pueblo, gaming revenues have been reinvested into a major expansion

of the Pueblo’s economic base, including two travel centers, a resort development

project, and the revival of Laguna Industries. Laguna anticipates adding 1,000 jobs

this by this fall. In addition, the Pueblo has spent funds on housing development

sorely needed by its members.

At Santa Clara Pueblo, the Tribe has reinvested revenue from its small casino operation into a championship golf course that just opened this spring, and in land

acquisition in an effort to regain areas of the Pueblo that have been lost over the

years.

The Pueblo of San Juan has reinvested their gaming revenue into tourism, an expansion of their economic base, and much needed housing for their tribal members.

San Felipe Pueblo has also invested their revenues in housing for Tribal members, and an education program for their young. They have expanded their economic

base through the creation of a travel center and a car racetrack that draws fans

from across the Southwest.

Santa Ana Pueblo has reinvested their gaining revenues into a major expansion

of the tourism industry. The Pueblo has created a world-class resort and golf center,

and has spent millions of dollars on the environmental restoration of the bosque on

their land. They have also reinvested their revenues by producing housing for their

tribal members.

The Jicarilla Apache tribe has spent gaming revenues on the renewal of their

tourism industry. Their focus is on tourists who want to enjoy the beauty of their

remote reservation. They offer guest lodges, and hunting and fishing opportunities.

At the Mescalero Apache Tribe, gaming revenues have been used for tourism/hospitality expansion, housing, a school, a dialysis center, senior assisted living home,

and reinvestment into the tribe’s industrial base. Mescalero’s tourism/hospitality expansion will add to its extensive workforce and make them the largest employer in

Lincoln County.

Pojoaque Pueblo has used its gaining revenues to start a museum, develop housing, build a wellness center, and expand their economic base.

At Taos Pueblo, the casino operation has provided revenue for the tribe to protect

its sacred Blue Lake. To stop encroachment or development of the area, the Tribe

has purchased land surrounding their sacred area as a buffer zone. This goes directly toward retaining, and maintaining the history, culture, and traditions of this

tribe as they move forward into this century.

In preparation for economic development and economic diversification; tribes have

invested in new construction. From 1999 to 2001 we have estimated an investment

in new construction of $350 million dollars in gaming and hospitality related development. I am pleased that many of the Pueblos and tribes in New Mexico are beginning to prosper through tribal government gaming enterprises and are diversifying

their economies. New Mexico’s Tribes are on the verge of creating a world-class hospitality and entertainment industry complete with high class resorts, casinos, golf

courses, fine dining and some the best entertainment acts in the country.

I am proud that much progress has been made. This progress has been made

without falling victim to the ills and sensationalized accusations of the recent Time

Magazine articles. The Pueblos and tribes of New Mexico are among the most traditional communities in Indian country. We were never displaced from our land, and

we have retained our culture, our languages, and our traditions. But we never could

get a foothold into the economic world until Indian gaining. Our tribal leaders had

to fight to get what we have, and we have continued to maintain our traditions and

our culture even as we move forward economically. But this came about because of

wise and careful decisions made by each of the tribal governments. Our governments have not issued per capita checks to members dividing up the proceeds from

and to my knowledge there is no movement in that direction. We have chosen instead to use the gaming revenues to create programs that work for our people, and

to continue to diversify our economies into other areas. There are no management

companies taking huge cuts of the profits in New Mexico, and there are no lurking

controversies over casino profits. Indian gaming is working in New Mexico, and this

has created benefits for our tribes and our people that could not have been imagined

before.

These efforts have not gone unnoticed by the new administration in New Mexico

or the private sector. We are forming new public and private partnerships to expand

New Mexico’s tourism industry. The state’s Tourism Department is actively promot-
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ing Indian casinos and the world-class entertainment being offered. We have formed

partnerships with old adversaries as they see the benefits of cooperation to expand

the hospitality markets for New Mexico.

Yes; much progress has been made, but much must still be done to secure the

economic future for tribes in New Mexico. A few years of success will not make up

for the decades of neglect and not all tribes in New Mexico choose gaming or see

gaming as a feasible undertaking for their circumstances. To secure our economic

future tribal governments must find reliable sources of income upon which they may

rely to finance development and operate tribal government over the long term.

In closing I want to thank the committee for the time you have given to hear our

compact and revenue sharing negotiations story and to hear how we use gaming

revenue in New Mexico.

FRANK CHAVES, CHAIRMAN, NEW MEXICO INDIAN GAMING ASSOCIATION, QUESTIONS

WITH RESPONSES

Thank you for the opportunity to participate in the July 9, 2003 hearings on the

Indian Gaming Regulatory Act and for the opportunity to provide a written response

to the following questions posed in your July 15, 2003 letter. Below I restate the

issue and the question and provide a response. 1. From your testimony, it appears

that many of the member tribes in your organization have agreed to the 2001 compacts. You state that, under these compacts, the tribes enjoy ‘‘substantial market

exclusivity.’’

Question. Is this ‘‘substantial exclusivity’’ guaranteed in your compacts?

Response. The term ‘‘substantial exclusivity’’ is not contained in 2001 Compacts

but is a term used to describe the guarantee provided by the State in exchange for

revenue sharing. The 2001 Tribal-State Compacts contain an agreement by which

the tribal governments guaranteed revenue sharing payments to the State in exchange for the State’s guarantee that it will not pass, amend or repeal any law or

take action that would directly or indirectly attempt to restrict or has the effect of

restricting the scope or extent of Indian gaming. Under these terms, the State cannot license or permit the operation of Gaming Machines for any person or entity

other than horse racetracks and veterans and fraternal organizations as described

by State statute. The State may not license, permit or otherwise allow any non-Indian person or entity to engage in any other form of class III gaming other than

a state-sponsored lottery, pari-mutual betting on horse racing and bicycle racing, operation of Gaming Machines, and limited fundraising by non-profit organizations.

Question. Can the state legislature increase the number of slot machines that

horse racetracks can offer? Has it increased the number since your compacts were

negotiated in 2001?

Response. As a matter of State law, the State could increase the number of slot

machines that horse racetracks can offer. However, it is the tribes’ view that any

increase in the number operating under State law as of 2001, when the tribes

agreed to and the Secretary of the Interior approved the Compacts, would require

a negotiated settlement. In addition, any action by the State that has a detrimental

effect on the tribes’ market share would require negotiations. This position is based

on: (a) the agreement to make revenue sharing payments to the State in exchange

for market exclusivity; (b) the ‘‘substantial exclusivity’’ provisions contained in the

Compact, interpreted in accordance with applicable law; (c) the terms of the Secretary’s approval of the Compact, and most importantly (d) the principles of comity,

good faith, and fair dealing which apply to relations between the State and tribes.

The State has not changed the laws on horse racetrack operations that affect competition since 2001. To the credit of the Governor and the legislative leadership,

when a proposal to extend track hours of slot operation was introduced in the 2003

legislative session, it was deferred to a future session to allow the matter to be discussed with tribes and amendments to the Compacts to be negotiated.

Question. What are the consequences to the State if your ‘‘substantial exclusivity’’ is lost?

Response. If substantial exclusivity is lost, under the terms of the Compact revenue sharing ceases.

2. I noted in your testimony that New Mexico tribes are building $350 million in

gaming and hospitality-related development.

Question. When calculating your revenue sharing, are those capital improvements costs deducted before calculating the State’s share?

Response. No; tribal government capital improvements costs are not deducted before calculating the State’s revenue share.
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3. As I understand the situation, the New Mexico tribes were forced to pay the

16 percent revenue share before the State would agree to the 2001 Compacts, even

if that amount was illegal under the IGRA.

Question. Did the Department of the Interior give you any guidance about the

provision, and whether it violated IGRA?

Response. The Secretary allowed the 1997 Compacts to go into effect by operation

of law without affirmative approval. That action resulted in approval by the Secretary ‘‘but only to the extent that Compact is consistent with [IGRA]’’.

25 U.S.C. §2710(d)(8)(C). In letters to the tribes explaining the basis of this action,

the Secretary questioned the legality of the 16 percent payment under IGRA based

on the limited scope of exclusivity provided under the Compacts, particularly in

light of the size of the payment, and the fact that the payment was effectively imposed on the tribes rather than agreed upon as the result of bilateral negotiations.

The question of whether the 1997 Compact revenue sharing provision was consistent with IGRA led to tribal payments stopping and litigation between the tribes and

State. As part of the negotiations that resulted in the 2001 Compact, the tribes

agreed to a complete settlement of issues in dispute in that litigation as a condition

precedent to the Compact. While questions regarding the linkage of the 2001 Compact and the litigation were raised, the Secretary recognized that the issue before

her was the terms of the 2001 Compact and not the terms of settlement of litigation

over the 1997 Compact. Although Interior had provided guidance regarding the legality of the 16 percent provision in 1997, the issue of how the tribes and State

chose to resolve litigation over that issue was outside the review and approval process to for the 2001 Compact. Therefore, the Department of the Interior did not provide guidance with respect to that settlement.

4. Without a doubt the 1996 Supreme Court decision in the Seminole case placed

tribes in a very bad negotiating position.

Question. Do you believe the New Mexico tribes would have had to ‘‘share’’ their

revenues, if they could still sue the State for ‘‘bad faith’’ as they could before the

Seminole decision?

Response. No; I do not believe the New Mexico tribes would have had to share

their revenues if they could sue the State for bad faith. In 1995, prior to the Seminole case, the New Mexico tribes chose, in a separate agreement from the Compact,

to share their revenues in exchange for the significant benefits the State would provide in return. In 1995, at one of the final negotiation sessions, the Governor spoke

directly to tribal leaders about the reasons he felt the tribal leaders should consider

revenue sharing with the State. Initially, the tribal leadership resisted the concept

but ultimately came to the conclusion that the reasons were convincing. In a postSeminole environment, Seminole does significantly and adversely affect the tribes’

bargaining leverage in the Compacting process. As seen in the complex and divisive

history of New Mexico Compact negotiations, the tribal leaders are left to their own

devices in a largely political process to the detriment of tribes. In this post-Seminole

environment there is increased pressure to agree to revenue sharing amounts and

other terms that tribal governments might not otherwise agree to.

Thank you again for the opportunity to respond to committee’s questions. Should

you need anything further, I would be pleased to respond.
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